Potential buyers are coming to BBMC Mortgage, and hundreds of lenders around the country, with one simple frustration, "What gives with these rising interest rates?"
We understand the immediate frustration you may feel after missing out on the lowest rates in modern lending history. But we're here to provide some perspective to convince you that rising rates really aren't that bad.
Here are a few reasons to look behind the numbers.
Stronger Economy Means Tougher Rates
When the Federal Reserve agrees to raise national interest rates, they are acting on several factors including joblessness rates, non-agriculture payroll growth and estimated economic projections. Some experts would argue the latter point is the key to a rate-raising decision.
The strength of the economy is something entirely beyond any mortgage lender. In this instance, a rise in rates reflects a statistic that may not feel tangible to most buyers. That's okay, a shift in interest rates is all about perception, and in this case a negative perception of positive growth doesn't make a lot of rational sense. Learn to look past the short-term frustration and try to understand what it means for the economic outlook on the whole.
High Rates Require Stronger Buyers
You may be in a position to buy with a higher interest rate, and that only works in your favor. Higher interest rates are another way of saying, "We believe buyers are able to afford higher costs associated with mortgage loans and will adjust rates accordingly." The main reason to shift rates at all is to adjust for inflation and keep the overall economy in a competitive position.
But if you're still in a position to afford a mortgage, even at a higher rate, then you have a ton of financial power – according to banks and lenders everywhere. You are more likely to get approved for a loan if you can prove you have the assets, income and credit history to reflect your reliability as a consumer.
What we're saying is this: don't take rising rates as an insult, but take them as a measure of confidence in your ability to manage your finances.
Rates Aren't Rising At Uncontrollable Levels
It's easy to say "rising rates" and immediately pictures a number growing so fast it puts you out of a buying position. In reality, the interest rates on conventional mortgages have raised anywhere between .25% and .50% since last fall.
At some point, the rates will steady out. This is a guarantee in every economic scenario, because banks and lenders want consumers to afford credit card and mortgage loan payments.
Take solace in knowing that when a TV pundit or your neighbor unleashes fury at "rising rates", they may be having a knee-jerk reaction to a perception of what's happening versus the reality of long-term interest rate climbs.
We still understand the frustration of some buyers missing out on 4.00% or lower interest rates of the past decade. While those numbers are still achievable rates for well-qualified buyers, others should understand that banks and lenders are seeing more trustworthy clients who have done their financial due diligence. BBMC Mortgage wants our clients to have total financial control, and a national increase in rates is a reflective that many buyers are achieving that goal at a sustainable rate.
When you're ready to speak about your next home mortgage need, feel free to give us a call.